TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Manufacturing unit providing taxable output services can use Cenvat Credit to pay Service Tax under Cenvat Credit Rules, 2004</h1> CESTAT held that a manufacturing unit which also provides taxable output services may utilize Cenvat credit to discharge its Service Tax liability. ... Eligibility of output service provider to avail Cenvat credit for utilization towards payment of Service Tax - activity of manufacture as well as they are output service providers - deeming provisions of Section 68(2) of the Act read with Rule 2(d) of the Service Tax Rules, 1994 - HELD THAT:- I find that as per Cenvat Credit Rules 2004 output service means any taxable service provided by the provider of service to a customer, client and a person liable to pay Service Tax and provider of taxable service include a person liable for paying Service Tax. Further, I find that as per CBEC Excise Manual of supplementary instructions where certain restrictions were imposed for payment of Cenvat credit. As per the Cenvat Credit Rules and as per the Manual, there is no restriction for utilization of Cenvat credit by the manufacturing unit towards payment of Service Tax as service tax provider. In these circumstances, I find no infirmity in the impugned order, the appeal is dismissed. Issues:- Eligibility of output service provider to avail Cenvat credit for utilization towards payment of Service Tax.- Interpretation of Cenvat Credit Rules, 2004 regarding dual role of manufacturer and service provider.- Restrictions on utilization of Cenvat credit under CBEC Excise Manual.Analysis:1. Eligibility of Output Service Provider for Cenvat Credit:The appeal challenged the Commissioner (Appeals) order allowing the respondents, engaged in manufacturing and output services, to avail Cenvat credit for payment of Service Tax. The Revenue contended that as the actual service provider is the transporter, the party deemed as the service provider is not entitled to Cenvat credit. The argument was based on the distinction between the actual service provider and the party deemed as the service provider under Section 68(2) of the Finance Act, 1994.2. Interpretation of Cenvat Credit Rules for Dual Role Entities:The party in question had a dual role as a manufacturer and service provider due to deeming provisions of the Act. The Revenue argued that while the Cenvat Credit Rules, 2004 apply to both categories, the definitions of 'inputs', 'capital goods', and 'input service' differ for manufacturers and service providers. The contention was that the Cenvat credit of manufacturing activity cannot be used for discharging Service Tax liability as a deemed service provider.3. Restrictions on Utilization of Cenvat Credit:The judgment referred to the CBEC Excise Manual, highlighting restrictions on the utilization of Cenvat credit for various duties. The manual specified that certain duties could only be utilized for payment of specific duties and not for Service Tax on output services. However, it was noted that there were no restrictions on the utilization of credit for duties other than those explicitly mentioned.In conclusion, the Vice President, relying on the Cenvat Credit Rules and the absence of restrictions for utilizing Cenvat credit by manufacturing units for Service Tax payment as service providers, found no fault in the Commissioner (Appeals) order. Consequently, the appeal was dismissed, affirming the eligibility of the output service provider to avail Cenvat credit for Service Tax payment.
TaxTMI 
TaxTMI 
